Caring for Ageing Parents While Saving for Retirement

Sarah's story sounds achingly familiar to many New Zealanders in their fifties. Her mother needs help with groceries and medical appointments. Her father's memory isn't what it was, and someone needs to be there. Meanwhile, Sarah's own retirement planning has stalled. The KiwiSaver contributions that felt so important last year now compete with prescription costs and taxi fares she pays on her parents' behalf.

It's normal to feel stretched thin. It's normal to wonder if you're sacrificing too much of your own future. And it's absolutely normal to feel guilty for even thinking about your retirement when your parents need you now.

This is the reality for the sandwich generation: New Zealanders caught between supporting ageing parents and securing their own financial future. The emotional weight is heavy enough without the financial pressure that comes with it.

Most family caregivers dramatically underestimate what they're spending. It's not just the big expenses - it's the accumulation of small costs that never stop.

According to research from Stats NZ, New Zealanders providing regular care to family members often spend between $15,000 and $30,000 annually when all costs are tallied. This includes:

• Direct financial support: Helping with bills, medications, groceries, or home maintenance
• Transportation: Petrol, parking, or taxi fares for medical appointments and errands
• Time costs: Reduced work hours or declined promotions that impact your income
• Home modifications: Grab rails, ramps, or accessibility upgrades
• Respite care: Paying for professional help when you need a break
• Your own health: Stress-related medical costs that caregivers often experience

These costs rarely appear as a single line item in your budget. They're disguised as small, loving gestures - paying for a prescription here, covering a power bill there. But over months and years, they add up to a significant diversion from your retirement savings.

Many caregivers also face reduced KiwiSaver balances not from withdrawing funds, but from lowering contribution rates or reducing work hours to accommodate caregiving responsibilities. A drop from full-time to part-time work doesn't just reduce your current income; it compounds over the years you have left until retirement.

Here's something many caregivers struggle to accept: prioritizing your retirement isn't selfish. It's actually one of the most responsible things you can do for your family.

Think about it this way - if you deplete your retirement savings now, who will care for you in 15 or 20 years? Your children will likely face the same impossible squeeze you're experiencing now, but potentially with fewer resources and less time to prepare.

NZ Super provides a foundation, with current rates sitting at around $451.28 weekly after tax for a single person living alone (as of April 2025, according to Work and Income). But most financial planners suggest you'll need 60-80% of your pre-retirement income to maintain your lifestyle. If you're earning $70,000 now, that's $42,000-$56,000 annually - significantly more than NZ Super alone provides.

The mathematics of compound growth means that money you save today has exponentially more impact than money saved later. Every year you delay contributions costs you not just that year's savings, but all the growth those savings would have generated over the remaining years until retirement.

This isn't about choosing between your parents and yourself. It's about finding a sustainable balance that honors both responsibilities without destroying your future in the process.

The good news is that with some strategic thinking, it's possible to support your parents while maintaining momentum toward your own retirement. It requires honesty, planning, and often some difficult conversations - but it's achievable.

Start with a complete financial picture

Before you can make informed decisions, you need to understand exactly what's happening with money. Create two separate tallies: one for your parents' financial situation and one for your own caregiving costs.

For your parents, gather information about their income (NZ Super, any investments or rental income), expenses, assets, and debts. Many adult children discover their parents qualify for support they're not receiving, or that assets could be better structured to provide income.

For yourself, track every caregiving-related expense for three months. Include obvious costs like petrol and groceries you buy for them, but also hidden costs like reduced work hours or declined overtime. The total might shock you - but you can't create a sustainable plan without knowing the real numbers.

Explore government support options

New Zealand offers several support programmes that many families don't know about or don't think to apply for. Work and Income provides various forms of assistance, including the Disability Allowance (which can help with ongoing costs related to a disability or health condition) and the Residential Care Subsidy for those needing care facility support.

There's also the Carer Support payment available in some situations, though eligibility requirements apply. The process can feel bureaucratic and frustrating, but the financial support can be meaningful. Consider it part of your caregiving work to research and apply for every form of assistance your parents qualify for.

Maintain minimum KiwiSaver contributions

If you're employed, you might be tempted to drop to the minimum 3% KiwiSaver contribution rate (or apply for a savings suspension). Before you do, run the numbers on what this costs your retirement balance.

A 45-year-old earning $60,000 who drops from 4% to 3% contributions saves $600 annually - but potentially sacrifices $8,000-$12,000 in retirement savings by age 65 when you account for compound growth and reduced employer contributions. Sometimes that trade-off is necessary, but make it with full awareness of the long-term impact.

If you're self-employed, the temptation to skip KiwiSaver contributions entirely can be strong when cash is tight. Consider treating your KiwiSaver contribution as a non-negotiable bill, even if it's a modest amount. Recent changes to KiwiSaver have made contributions more important for the self-employed.

Have the family money conversation

This is often the hardest step, but also the most important. If you have siblings, they need to understand the full financial picture - both the costs of caring for your parents and the impact on your retirement.

Some families split caregiving costs based on income or proximity. Others have non-financial caregivers receive a larger share of any inheritance to recognize their contribution. Some discover that siblings who seemed uninvolved are actually willing to help financially, they just didn't realize the extent of the costs.

These conversations feel uncomfortable because we're taught not to discuss money with family. But the alternative - silently sacrificing your financial future while others remain unaware - leads to resentment and eventually crisis.

Consider the timing of major decisions

Some caregiving situations are temporary - a recovery from surgery, a health crisis that stabilizes, or a transition to professional care. Others are long-term commitments that will last years.

Understanding which situation you're in matters enormously for retirement planning. If you're facing 2-3 years of intensive caregiving, strategies that pause retirement contributions might be acceptable. If you're looking at 10-15 years, you need a fundamentally different approach that maintains some level of retirement savings throughout.

This is also where honest conversations with your parents about their wishes and plans become crucial. Many elderly New Zealanders resist discussing care homes or selling the family home, but these decisions have massive financial implications for both them and you. Earlier conversations - before crisis decisions are necessary - lead to better outcomes for everyone.

There's often an assumption that family caregiving is always cheaper than professional care. Sometimes that's true, but the calculation is more complex than it appears.

Professional home care typically costs $28-$35 per hour in New Zealand. Residential care facilities range from $1,000-$2,500 weekly depending on location and level of care required. These numbers feel astronomical when you're trying to manage them on top of your own expenses.

But consider the alternative: if providing care yourself requires reducing your work hours from full-time to part-time, you might lose $30,000-$40,000 annually in income. Add the reduction in KiwiSaver contributions (both yours and your employer's), the loss of career progression, and the compound effect over multiple years, and the total cost can exceed professional care - while also decimating your retirement savings.

Some families find a hybrid approach works best: professional care for medical needs and heavy physical tasks, family involvement for companionship and lighter support. This preserves your ability to work and contribute to KiwiSaver while still maintaining meaningful involvement in your parents' care.

The Residential Care Subsidy from Work and Income can help cover care facility costs once your parents' assets fall below certain thresholds. While spending down assets to qualify isn't anyone's preferred plan, it's worth understanding how the system works before making decisions about paying for care privately.

Research consistently shows that family caregivers experience higher rates of stress, depression, and physical health problems than non-caregivers. You can't save for retirement if you're too sick to work - or if you've burned out completely.

This means building respite care into your plan from the beginning, not waiting until you're desperate. Whether that's paying for professional help one day a week, having siblings take over for a weekend monthly, or accessing community support services, regular breaks aren't a luxury - they're essential maintenance.

The cost of respite care should be factored into your caregiving budget from the start. It's far cheaper than the medical bills and lost income that come from caregiver burnout.

For many sandwich generation caregivers, the original retirement plan - stopping work at 65, traveling, enjoying leisure time - needs adjustment. That doesn't mean giving up on retirement; it means creating a new version that accommodates your current reality.

Some considerations include:

• Delayed retirement: Working until 67 or 68 instead of 65 gives your KiwiSaver additional years to grow and reduces the number of years you need to fund from savings
• Phased retirement: Gradually reducing work hours rather than stopping completely can provide income while giving you more time for caregiving
• Different expectations: Your retirement might look different from what you imagined - perhaps more focused on local activities than international travel initially
• Geographic decisions: Some families find that living in lower-cost regions makes both caregiving and retirement more affordable

The goal isn't to match some idealized version of retirement you imagined at 30. It's to create a realistic plan that allows you to eventually stop working while maintaining a comfortable lifestyle. That might happen later or look different than you originally planned, but it's still achievable.

For more on adapting your retirement timeline, our guide on retiring early in New Zealand explores how different retirement ages impact your savings needs.

Beyond the practical strategies and financial calculations, there's a deeper question every sandwich generation caregiver needs to ask themselves: What do I genuinely owe my parents, and what do I owe my future self?

Different families and cultures answer this question differently, and there's no universal right answer. But answering it clearly - for yourself - is essential for making sustainable decisions.

Some adult children feel a moral obligation to provide unlimited support regardless of personal cost. Others believe they should help within their means while still prioritizing their own family's security. Many feel torn between these positions, wracked with guilt about every dollar spent on themselves instead of their parents.

Here's what we know from working with hundreds of New Zealanders in this situation: The most sustainable caregiving arrangements come from clear boundaries decided in advance, not reactive guilt-driven decisions made in crisis moments.

You can decide that you'll contribute $X monthly to your parents' care, but not more. You can decide that you'll provide hands-on care for Y hours weekly, but will pay for professional help beyond that. You can decide that certain retirement savings (like KiwiSaver) remain untouchable, even when other expenses squeeze.

These boundaries aren't selfish - they're the framework that allows you to provide sustainable support without destroying your own future. And ultimately, that serves everyone better than burning yourself out financially and emotionally.

So what does a practical plan actually look like when you're balancing these competing priorities?

Start by getting clear numbers on both sides of the equation. Calculate your parents' true financial needs after all available government support. Then calculate your own retirement savings requirements using a realistic timeline that accounts for caregiving years. Tools like fidser.'s retirement calculator can help you model different scenarios - what happens if you reduce contributions for three years? What if you work until 67 instead of 65?

Next, identify your non-negotiables. For most people, this should include at least minimum KiwiSaver contributions if employed, maintaining emergency savings, and preserving your ability to earn income. Everything else can be flexible and situation-dependent.

Then create different tiers of support based on your financial capacity. In good years when work is steady and expenses are manageable, you might provide more help. In tight years, you scale back to essentials. This flexibility prevents one bad year from derailing your entire retirement plan.

Document everything, including informal family agreements about who's contributing what and any expectations about inheritance or future payback. Written clarity now prevents painful conflicts later.

Finally, commit to regular reviews - quarterly or six-monthly check-ins where you reassess both your parents' needs and your own financial situation. Caregiving needs change, your income changes, government support options change. A plan that worked last year might need adjustment now.

For help thinking through estate and family financial planning, our guide to estate planning basics covers important considerations for protecting your own future while managing family obligations.

Important: This article is general information only and does not constitute personalised financial advice. Every family's caregiving situation and retirement needs are different. For advice tailored to your specific circumstances, speak with a licensed Financial Advice Provider. You can find a registered adviser at fma.govt.nz.